Senators blast rise in GI Bill funds going to for-profit colleges

WASHINGTON — For-profit colleges aggressively targeting student veterans doubled and in some cases nearly tripled the amount of GI Bill funding they took in last year, a trend lawmakers called disturbing and potentially predatory.

“Veterans returning from Iraq and Afghanistan are becoming increasingly vulnerable to being recruited into high-cost, low-quality for-profit colleges,” said Sen. Tom Harkin, D-Iowa, chairman of the Senate Health, Education, Labor and Pensions Committee. “That’s not what we want for our veterans.”

New data from the committee released Thursday shows dramatic spikes in GI Bill money being funneled to companies like Education Management Corp., ITT, and DeVry.

University of Phoenix, the No. 1 recipient of GI Bill dollars in the 2010-2011 school year, pulled in roughly $210 million in veterans education benefits, nearly triple the $77 million it collected a year earlier.

For-profits made up eight of the top 10 schools receiving GI Bill benefits last school year, together amassing more than $1 billion. In the 2009-2010 school year, those eight companies got less than $400 million in GI Bill funds.

At issue is the so-called “90-10 rule,” which requires all universities get at least 10 percent of their funding from nongovernment money. The rule was intended to keep companies from siphoning profits out of government education benefits. But GI Bill benefits aren’t counted as federal funds under the statute.

The result, critics charge, is that for-profit schools can lure veterans into classes with the promise of a “free” education, then pocket extra federal money.

Veterans groups and lawmakers have been targeting for-profit schools for months, charging them with scooping up veterans’ education benefits without providing a real college education. Corporate officials have countered that their schools offer an alternative to the traditional brick-and-mortar colleges that are virtually inaccessible to many veterans with full-time jobs and troops deployed overseas.

“Asking our brave military men and women to place themselves in harm's way one day and in the unemployment line the next is unacceptable,” Brian Moran, interim president of the Association of Private Sector Colleges and Universities, said in a statement.

“While a traditional postsecondary experience is appropriate for many veteran students, others want the kind of flexible and accelerated schedules, career focused programs, and immersive instructional methods that characterize a quality education.”

But Harkin’s committee charged that most for-profits simply aren’t providing any value to student veterans. Of the eight for-profits receiving the most GI Bill money, five saw more than half of their students fail to graduate. Kaplan University and its related schools saw more than 68 percent of its bachelor’s degree students wash out last year.

For comparison, the two public universities with the highest GI Bill receipts — University of Maryland and University of Texas — had 13 percent and 26 percent of their first-time full-time students drop out. Harkin said the numbers draw a stark contrast between schools providing veterans a future and those simply stealing money.

“The GI Bill is one of the smartest investments Congress has ever made,” he said. “To think that [veterans] many times have spent it on schools where it was wasted … that’s what really gnaws at you. These people have risked their lives in Iraq and Afghanistan. And they’re getting led into this by aggressive recruiting.”

Veterans groups have charged that the for-profit college issue isn’t just a problem for the military. Abuse of the GI Bill benefit also wastes taxpayer money and robs veterans of a chance to become productive members of civilian society, they say.

Last school year, for-profit universities collected more than $30 billion in federal student aid, not including totals from GI Bill payouts. While the schools enroll only about 10 percent of the total number of students attending college, they account for half of all federal student loan defaults.

In a letter to Senate leaders, AMVETS officials called practice of targeting veterans for their GI Bill benefits shameful.

“This huge surge by many for-profit colleges in seeking out veterans for enrollment is not out of compassion, concern or appreciation for their service to our country, but rather a way to circumvent the ‘90-10’ federal funding rule,” wrote Christina Roof, deputy legislative director for the group.

VFW officials have been pushing to revise that rule, to include GI Bill benefits with other federal dollars. Deputy Legislative Director Ryan Gallucci called the current rules a complex and confusing mess, easily manipulated by for-profit schools.

In his statement, Moran said that further restricting federal funding rules would only hurt student veterans, by limiting their choices. VA officials said they support the idea of revising the “90-10” rule, but warned that reputable schools might also be hurt if changes are made too hastily.

On Thursday, Sen. Tom Carper, D-Del., said Senate leaders are working on a bipartisan fix to that problem, to be introduced by the end of the year.

Before that, however, Carper said he and Harkin will push to protect existing rules requiring more transparancy in school graduation rates and tution costs, in an effort to better inform veterans considering for-profit colleges.